I'd been puzzling over the apparent discrepancy between the FPV build numbers and the sales figures bandied about by a couple of recent articles.

A bit of a delve into the detail of the VFACTs numbers shed a little bit of light on the situation and showed that total sales to the end of August amounted to some 600 odd units while total builds were somewhere around the 1100 mark.

The intervening circa 500 units are sitting in dealer holding yards, which means that they pass the Ford definition of sold (invoiced to a dealer) but not VFACTs definition (registered).

To put those numbers in persepctive, the range has been seliing around 100 units per month (average) over the 6 months since builds commenced in earnest. Thaqt means that the present stock levels equate to about 5 months of sales assuming that the same level of activity can be maintained, which is probably unlikely given that there was some early pent up residual demand that had to be met.

Recent numbers suggest that the sales level might be closer to 70-80 units per month which then turns that stock level into a 7 month proposition.

Now for those who think (probably correctly) that the silly old fool is dribbling again , let me put this into the light of harsh reality with a little lesson on how the system works.

Ford sell the vehicle to your local dealer at an invoice price somewhat less than the RRP and the difference between the two represents their profit. Obvious.
The dealer finances the vehicles held in stock through a thing called a floor plan, which basically means that they incur interest charges on the value of the cars in the holding yard.

Eventually, the costs associated with holding a vehicle (interest, damage, etc.) reaches the point where the margin is reduced to zero and the dealer starts to actually be in a negative position - that is the car owes them more than they are going to get for it.

Sometimes, on slow moving models (like Cougar or T-Series) the manufacturer will choose to offer the dealers additional sales incentives or floor plan subsidies to minimise those potential losses but on other occasions they will just leave the dealer network holding the (dead) cat.

So what's my point?

Simply this. When dealer stock levels are high and subsidies or incentives seem unlikely, our friends in the dealer network usually opt to off load those vehicles at a price closer to invoice price than RRP. In extreme circumstances they are willing to cut their losses to move the offending items rather than continue to incur floor plan costs and then we see the discounting behaviour that was a bit of a trademark in the middle and latter portion of the AU. As a matter of business survival, once one starts, the rest tend to follow.

This situation is potentially exacerbated with the FPV range for two reasons.

Firstly, the dealer margin on the vehicle is below the level that is generally considered viable and secondly the model build mix appears to be not quite matched with the actual buying patterns especially with the ute.

Let me draw a hypothetical - the numbers aren't the real ones but they will do to show the point.

The dealer is invoiced for the Widget GTR-x (which has an RRP of $60,000) at $57,000 thus leaving a margin of $3,000 (ignoring the GST implications at this point). The dealer has a recommended delivery charge of $1,200 for a total potential margin of $4,200 which is reduced by the commission paid to Sammy Salesman (say $100) to $4,100.
The dealers floor plan is financed at the very kind rate of 6.5% and thus the interest charge on the Widget GTR-x amounts to $308.75 per month. In the real world there are other costs that are applied to the vehicle whilst held such as showroom running cost, minor damage, salesperson retainers etc. but we will ignore these for this simplified exercise.
Now for the simple maths.
At $308.75 per month, the floor plan will eat up the entire margin in a little over 9 months - in the real world that is likely to be far less - but before that happens the DP, sales manager, bean counter or the cleaning lady will make the decision to discount the thing to get rid of the liability.

So here is my crystal ball gaze into the not too distant future, assuming that nothing is done to remedy the situation.

1. GT and GT-p's will be on the market at between 5-7 % off RRP. Pursuits a bit more.
2. Demand will further slow as new product in the rest of the Ford range cannibalises some sales.
3. Resale values of GT/GT-p will suffer accordingly. 2nd hand Pursuit buyers will have to choose between a Pursuit and a Big Mac with their loose change.

Of course, I'll be happy to be proven wrong but I have history on my side. All we can do is prepare ourselves for the inevitable shock at trade in time and enjoy the great vehicles we have in the mean time.

Well, I agree on the Pursuit thing. But more because the POS I bought ain't worth half of what I paid for it and that's the facts.

However, you are neglecting the other means that dealers have to make profit such as advertising incentive/rebate etc etc which quickly will add up to double the suggested profit when looking at RRP and invoice.

As for your final statement I wish I could enjoy myself in the meantime......but I'd have to have a car to do that wouldn't I?

I think you're jumping the gun a bit. Ford claim they have a heap of future orders for FPV's and can't build enough of them. Your comments are pure speculation and nothing else. I'm sure resale values will be very good for such in demand products. The dealers are offering virtually no discounts on them so why claim that they will be. You should wait and see what happens in the future before you say things like that. I think Ford have learned their lessons about resale values after the AU fiasco and seem to be doing everything they can to keep resale values up as this will help them to sell more cars to the fleets.

Dumb question of the day......
If there are 600 odd FPVs lurking around the dealers why then:
a) there is still a bloodly long wait tp get one. (I know everyone wants domething different but ther are not THAT many colors or options)
b) the ex demo journo cars sold wholesale at nearly new cost.
c) none of the dealers up here have ANY floor stock.
d) every time the local guy gets one it sells immediately (except for the pre ordered ones that are already sold)

What a friggen Joke! not at your post but at the concept of Ford recently holding a resale value!

Even a BA xr8 with over 10,000 on the clock aint worth more than 42k

Imagine with a couple more thousand on the clock, or the influx of the BA2 into the market.

Im sure Ford would be happy to keep potential buyers, and turn them over, but where do they get off thinking that in 12 months a buyer has to pull upto 20K out of their pocket to upgrade to a series 2 or 3?

I think Russell has summed it up nicely, Ford have NOT learned their lesson, good for some - the potential buyers of 2nd hand vehicles, bad for the fools like myself who jumped on the bandwagon and purchased the series 1.

The last of the Tickford range, the best looking and performance car they could manage, has more than 20k missing NEW still gathering dust

I think you're jumping the gun a bit. Ford claim they have a heap of future orders for FPV's and can't build enough of them. Your comments are pure speculation and nothing else. I'm sure resale values will be very good for such in demand products. The dealers are offering virtually no discounts on them so why claim that they will be. You should wait and see what happens in the future before you say things like that. I think Ford have learned their lessons about resale values after the AU fiasco and seem to be doing everything they can to keep resale values up as this will help them to sell more cars to the fleets.

That's the beauty of opinions - we're all entitled to them.
As it happens I agree that things are fine at the moment as they have been meeting the backlog of demand. However the (natural) sales slowdown is to be expected in much the same way as Monaro was and as long as production matches demand there won't be a long term issue.

However, I have little confidence that any lessons have been learnt and even less confidence in the claims that FPV are holding substantial forward orders - in fact I know they don't. Further, the issue isn't whether there are people waiting (which they are) because they are waiting because they want specific combinations that haven't been built. The issue is still with the built and unsold cars sitting on dealer floor plans plus the added pressure that will be applied to those units with some of the upcoming product.

Still, time will prove me right or wrong either way and I'm not too fussed which.

Do you think that Fords branding strategy will also exacerbate this situation. The move from Tickford/FTE to FPV was done for obvious reasons, but how is the company supposed to build up any brand loyalty and subsequent higher resale values (not withstanding the GT and XR badges) when it keeps on changing its damn identity?

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